When is a Car Declared a Total Loss?


In the collision repair business, one the weirdest explanations we have to give customers is why insurance companies sometimes declare a car a total loss, even though it’s drivable—maybe it doesn’t even look that bad.

Like everything in the insurance business, it’s about numbers, but the good news is that it ain’t “rocket surgery,” and there is a formula that’s easy to understand. Before we look at the formula, let’s talk about a few instant tip-offs that a car may be totaled.

Instant tip-offs that a car may be totaled

  1. Deployed air bags. Small as they are, these things can cost a couple of thousand dollars to replace. No, it doesn’t make sense, but that’s the reality of car design and safety regulation. If you’re driving a 10-year-old vehicle worth $3,500, it may be totaled with a deployed air bag and no other damage.
  2. LOTS of fluids on the ground after an accident. It’s not always certain, but this often indicates enough general damage to warrant a total loss declaration. It has to do with where the fluid reservoirs are located and how the car is assembled around them.
  3. The vehicle can’t be driven because of the damage. This can indicate damage to the frame of the car, which is often prohibitively expensive to repair because you have to take EVERYTHING off to work on the frame.
  4. Hail damage. With minor damage to enough individual chassis sections, a vehicle may be totaled even when it doesn’t look that bad. Auto body repair takes skill, time and equipment to do right, and the hours can really add up with even light damage over the whole vehicle.

The Total Loss Formula

The Total Loss Formula most insurance companies use is simple:

Cost of repair + salvage value compared to the actual cash value of the vehicle.

Different insurers and state insurance commissions use the formula differently. In some states, if cost of repair + salvage value equal 50 percent of the actual cash value of the car, it’s considered totaled. In other states, it may be 75, 80 or even 100 percent—a nice deal, if you can get it. This percentage is called the Total Loss Threshold (TLT).

In Kansas, the TLT is 75 percent, while our Tulsa, OK, collision repair shop is required to use a 60 percent TLT.

Is repair cost a fixed number?

Obviously, cost of repairs can vary from one shop to the next, as can the quality level of the work done. The first concern you should have is whether a shop can provide a level of quality that will allow you to feel good about driving your vehicle again. After the mental trauma of an accident or other vehicle damage, it’s important to recover a sense of confidence in your car’s mechanical integrity—and its appearance. Find a shop that you truly believe has the skill and integrity to do the very best job possible; then think about price. Peace of mind is worth more than money. Ask around, look at shops’ social network feeds, and ultimately, follow your instincts. Good people tend to do good work.

A good start is to find an established collision repair shop with certified technicians. A bigger shop may have pricing advantages on parts simply because they buy more parts than small shops.

You may have options to use OEM (Original Equipment Manufacturer, like Ford, Honda, etc.) parts versus rebuilt or after-market parts. This decision may affect price, but it may also affect the quality of the repair. Discuss this with a trustworthy body shop professional.

In some situations, you may have repair options that cost less. Paintless dent repair, alternative paint application processes, etc. These little-known techniques can save money, if they’re appropriate for your vehicle and situation. Not all shops offer these reduced cost alternatives, though; again, ask your body shop professional.

What to do if you have an accident or other vehicle damage

  1. Before you do anything else, make sure you and “yours” are safe. Much as some of us love our cars, they’re still just things, so keep your head about you.
  2. Turn on your hazard lights, if needed.
  3. Call 911, if there are injuries. Emergency responders are good at making all kinds of tough situations better, fast.
  4. Contact your insurance company.
  5. Contact your preferred collision repair shop. Your insurance agent may make recommendations based on his or her business relationship with a certain body shop rather than the actual quality of their workmanship, but this is ultimately your decision—and your vehicle.

Hope this helps! Have a great day and drive safely.